By Bikram Chitrakar

(Review for 16 Apr to 16 May, 2013)

The Nepali share market came down to six months low on a fear of oversupply of ordinary shares after a move of Securities Board to allow offloading promoter shares. The benchmark Nepse index tumbled 20.70 points or 4.14% to settle at 499.99 while the sessions high was on 16 April with 520.69 and the low was on 6 May with 481.93.

The stock market drifted down to nearly six months low after the regulator Securities Board of Nepal (SEBON) move to allow offloading of the promoter shares through brokers. General investors fear that this will cause an oversupply impacting their asset price. As a result, the benchmark Nepse index on May 16 plummeted below that of 3 December 2012. 

Though the regulator tried to pacify the investors stating that offloading of the shares will not affect market, the move does not seem to convince the investors. SEBON said, its move was simply to minimize the lengthy process under the previous rule that required an offer document to be prepared and publishing it before promoters shares could be offloaded.  The new rule does away with that and says such shares can be sold directly through brokers.  

There was another reason as well for the loss in the prices of the shares. During the review period, the price of bullions, particularly of the gold, has also gone down heavily attracting the investors away from the share market to the bullion market. The yellow metal lost nearly Rs 10,000 per tola (1 tola = 11.6638038 grammes). Nepali households buy gold for investment as well as for meeting some cultural necessities. 

Performance by Sector

Across the sectors, manufacturing and trading were the only two that gained. The ‘Others’ sector lost heavy (42.28 points or 6.60%) to rest at 640.32. Insurance sub-index plummeted 29.17 points to close at 859.99. Commercial banking sector trailed down 25.74 points or 5.19% to rest at 496.38. Similarly, hydropower sector descended 9.07 points to 1020.41. Hotels sector drifted 5.34 points along with 5.31 points fall in finance sector to 644.65 and 246.31 respectively. However manufacturing sector gained 26.32 points or 3.04% to rest at 866.55 while trading sector gained 2.93 points to 167.94.  

Sensitive index that measures the performance of 120 blue chip scrips skid 5.92 points or 4.72% to 125.55 while the float index calculated on the basis of real transaction went downhill 0.96 points or 2.69% to 35.75. Total turnover of Rs. 179,556,819 was recorded during the review period from 7,248,255 units of shares traded via 21,249 transactions.

The accompanying figure depicts the sector-wise distribution based on the total volume of trade. As usual, commercial banking sector dominated the total volume of trade by holding 73.38% share. Insurance sector accounted for 9.16% and hydropower sector 8.42% while the remaining sectors made up for the rest. 

Technically, the Simple Moving Average (SMA) has been dominated by Nepse index in the long term as 200 days SMA hovers below the index line while in the short term the index has approached towards the previous resistance level of 500 and suggests it is in a neutral position waiting for clearance towards new direction.

(Chitrakar is a Stock Analyst with Jamb Technologies Pvt Ltd.)